One big e-nightmare

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Electronic messages in all their instant glory have become the norm, but the legal traps for companies are still to be fully realised. Garry Barker reports.

Email, SMS and computer-to-computer instant messaging have become the essential tools of business communication. They are easy, instant and convenient to send and receive anywhere in the world, even on mobile phones and hand-held wireless computers.

But they are also traps for the unwary and a looming source of grief in the courts, says Emilios Kyrou, partner at Melbourne law firm Mallesons Stephen Jacques.

Kyrou, an expert on the legal consequences of errant emails and co-author of a new lawyers' handbook that deals with this and other traps in the modern, wired-up world, says many companies do not fully realise the dangers inherent in a system of messaging that is so often treated as if it were a casual conversation.

Electronic messages are documents of binding legal significance, and the future of a company, or an executive, can be decided by them, he says.

Indeed, ask anyone at Enron.

Still to come into mass use, but a probable extension of this legal quagmire, is internet-based voice and video conferencing in which files can easily be stored on a computer's hard drive and archived.

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For businesses it comes down to two simple but stunning questions: how do you store all these potentially lethal documents and, worse, how do you index them, trace all the possible links between them, and reliably retrieve them to make full disclosure for a court case?

Awareness has grown rapidly in the US and is rising in Australia, where Zantaz, a Silicon Valley start-up that recently bought email management company Educom, has become active through an association with Sydney-based data storage and management company SecureData Group.

SecureData managing director Evan Penn says the market is still emerging in Australia but he expects governments and regulators to soon take a closer interest in how companies handle their email correspondence.

People get an email and type an immediate response often without thinking. EMILIOS KYROU, partner at Mallesons Stephen Jacques

"In the US, the SEC (Securities and Exchange Commission) is very vigilant and insists on spot audits," he said. "Here we still have a loose agenda on the issue. Some companies, big multinationals even, insist on deleting emails every 30 days. The consequences in, say, HR claims and industrial disputes can be far-reaching."

Zantaz vice-president of marketing Craig Olson, who was recently in Melbourne, says the company doubled its customer base last year, increased revenue by almost 300 per cent and expects the curve to continue upwards.

He says Zantaz has succeeded because it goes beyond the "simple" storage and indexing of email and instant messages by offering wider support in the event of litigation.

Some of his clients, who include 14 of the top 20 financial institutions on the Fortune 500 list, have more than 3 billion messages stored on Zantaz's remote sites, he says.

Olson suggests email presents peculiar problems for business that managers are only now beginning to understand.

Kyrou agrees. Most people see email as a verbal exchange rather than what it is, a series of related documents that, once written and sent, cannot be called back, he says.

"People get an email and instinctively type an immediate response often in a casual way and without thinking about the consequences of what they are writing. They don't apply the same disciplines that they would use if they were writing or dictating a formal letter.

"You get vague language, acronyms and abbreviations," he says. "People are short of time and cut corners. They can be emotional or flippant and thus ambiguous, or even defamatory of, say, a third person."

For practical purposes, says Olson, the rise of email as a universal business tool, spurred by pressure on companies and employees to cut costs and speed customer response, has made the medium essentially unmanageable for even large corporations.

And, in the event of a court case, finding, retrieving and relating all the emails is almost always hugely expensive and time consuming. Even mid-range companies now handle hundreds of emails every day.

"Companies are struggling with the huge volumes they now have to handle," says Olson. "It's a significant challenge for IT departments - costly to maintain and to keep optimised, costly to back up and a problem if you get into disaster recovery."

Olson says IT managers see email as using up storage space and server capacity, "so they plead with employees to clear out their 'excess mail', and that in itself raises potential compliance problems.

"They implement quotas and automatically delete stuff if the user does not. In effect they are encouraging individuals to start grabbing information and storing it locally on a personal computer." Employees might leave a company, taking with them the only copy of a document that later becomes important in a lawsuit, he says.

"Email must be backed up and a secondary copy should be stored on a remote location. Back-ups must be quickly accessible and they must be on media that is write-once, read only, so that records cannot be altered."

Olson says Zantaz designed new grid computing architecture to handle indexing and retrieval and greatly improve the efficiency of storing, CPU processing and index processing."It allows you to spread the information over a lot of different elements so that when a request comes in a controller knows exactly where that data is.

"We can find an individual email (from among maybe billions) and make it available almost immediately."